Question 1

Refer to Banff Company. What is the fixed cost of leasing when using the high-low method?

Accepted Answer

A)  $420 
B)  $456 
C)  $482 
D)  $516 
A)  $420 
B)  $456 
C)  $482 
D)  $516

Question 2

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all.
-Cost of lubricating machinery

Accepted Answer

A) Variable cost 
B) Fixed cost 
A) Variable cost 
B) Fixed cost

Question 3

If output increases by 60% and is still within the relevant range, what will be the most likely result?

Accepted Answer

A)  Total variable costs will increase by 60%. 
B)  Per-unit fixed cost will remain unchanged. 
C)  Total committed fixed costs will increase by 60%. 
D)  Total discretionary fixed costs will decrease by 60%. 
A)  Total variable costs will increase by 60%. 
B)  Per-unit fixed cost will remain unchanged. 
C)  Total committed fixed costs will increase by 60%. 
D)  Total discretionary fixed costs will decrease by 60%.

Question 4

What is characteristic for the least squares (regression) method?

Accepted Answer

A)  It uses statistics to construct a cost formula. 
B)  It can easily be calculated without a calculator. 
C)  It is less accurate than the scattergraph method. 
D)  It analyzes a cost relationship by graphing the data points. 
A)  It uses statistics to construct a cost formula. 
B)  It can easily be calculated without a calculator. 
C)  It is less accurate than the scattergraph method. 
D)  It analyzes a cost relationship by graphing the data points.

Question 5

Match each following terms with their correct description from the items listed below.
-Has both a variable and a fixed component

Accepted Answer

A) Variable cost 
B) Fixed cost 
C) Mixed cost 
D) Step cost 
A) Variable cost 
B) Fixed cost 
C) Mixed cost 
D) Step cost

Question 6

Refer to Saskatoon Company. Using the least squares (regression) method, what is the value of the X Variable 1 (rounded to the nearest penny)?

Accepted Answer

A)  $0.99 
B)  $8.83 
C)  $195.35 
D)  $11,594.00 
A)  $0.99 
B)  $8.83 
C)  $195.35 
D)  $11,594.00

Question 7

Determining cost behaviour is essential to planning, controlling, and decision making.

Accepted Answer

A) True 
 B)False

Question 8

Why is it necessary to separate a mixed cost into its variable and fixed components?

Accepted Answer

For management to effectively plan, cont

Question 9

Match each following terms with their correct description from the items listed below.
-A factor that causes a change in cost or activity

Accepted Answer

A) Relevant range 
B) Cost behaviour 
C) Driver 
D) Variable cost 
E) Fixed cost 
A) Relevant range 
B) Cost behaviour 
C) Driver 
D) Variable cost 
E) Fixed cost

Question 10

Why is managerial judgment critically important in gathering information about costs?

Accepted Answer

A)  It is necessary to understand revenues. 
B)  It is important in determining cost behaviour. 
C)  Costs are enhanced by only by new managers. 
D)  It helps to broaden statistical estimation results. 
A)  It is necessary to understand revenues. 
B)  It is important in determining cost behaviour. 
C)  Costs are enhanced by only by new managers. 
D)  It helps to broaden statistical estimation results.

Question 11

A committed fixed cost can be changed relatively easily at management discretion.

Accepted Answer

A) True 
 B)False

Question 12

Churchill Company has the following information available regarding costs at various levels of monthly production:
Production volume 7,000 10,000
Direct materials $70,000 $100,000
Direct labour 56,000 80,000
Indirect materials 21,000 30,000
Supervisors' salaries 12,000 12,000
Depreciation on plant 10,000 10,000
Maintenance 32,000 44,000
Utilities 15,000 21,000
Insurance on plant and equipment 1,600 1,600
Property taxes on plant 2,000 2,000
Total $219,600 $300,600
Required:

Accepted Answer

A. Variable Costs Fixed Costs Mixed Cost

Question 13

Which of the following is the best example of a mixed cost?

Accepted Answer

A)  utilities 
B)  sugar at a bakery 
C)  rent on machinery 
D)  depreciation on production equipment 
A)  utilities 
B)  sugar at a bakery 
C)  rent on machinery 
D)  depreciation on production equipment

Question 14

Refer to Toronto Company. What is the fixed cost of electricity when using the results of regression?

Accepted Answer

A)  $2,180 
B)  $2,200 
C)  $2,225 
D)  $2,250 
A)  $2,180 
B)  $2,200 
C)  $2,225 
D)  $2,250

Question 15

Whistler Company makes downhill skis. The company controller wants to calculate the fixed and variable costs associated with janitorial services incurred by the factory. Data for the past six months were collected. Janitorial Labour
Month cost hours
July $9,200 10,120
August 8,800 9,500
September 9,350 10,500
October 9,620 11,100
November 8,400 8,660
December 9,400 10,650
What is the set of high and low months?
High Low

Accepted Answer

A)  July August 
B)  October November 
C)  December October 
D)  December November 
A)  July August 
B)  October November 
C)  December October 
D)  December November

Question 16

Using the high-low method, the calculation of the cost line uses the highest and lowest cost periods.

Accepted Answer

A) True 
 B)False

Question 17

Coefficients for the costs of maintenance, using machine hours as the driver, are shown by a regression program to be:
Intercept 7,600
X Variable 1 5.10
Required:
A. Using the results of regression, calculate the fixed cost of maintenance and the variable rate per machine hour.
B. Using the results of regression, construct the cost formula for the total maintenance cost.
C. Calculate the budgeted cost for maintenance assuming that 610 hours are worked next month.

Accepted Answer

A. Fixed cost = $7,600
Variabl

Question 18

Refer to Edmonton Company. What is the fixed cost of electricity when using the high-low method?

Accepted Answer

A)  $6,400 
B)  $10,860 
C)  $13,740 
D)  $24,000 
A)  $6,400 
B)  $10,860 
C)  $13,740 
D)  $24,000

Question 19

Refer to Lethbridge Company. What is the total utility cost for the month of May?

Accepted Answer

A)  $1,400 
B)  $5,440 
C)  $8,080 
D)  $9,480 
A)  $1,400 
B)  $5,440 
C)  $8,080 
D)  $9,480

Question 20

Describe the three methods used to determine cost behaviour.

Accepted Answer

The three methods used to determine cost

Refer to Banff Company. What is the fixed cost of leasing when using the high-low method?

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Cost of lubricating machinery

If output increases by 60% and is still within the relevant range, what will be the most likely result?

What is characteristic for the least squares (regression) method?

Match each following terms with their correct description from the items listed below. -Has both a variable and a fixed component

Refer to Saskatoon Company. Using the least squares (regression) method, what is the value of the X Variable 1 (rounded to the nearest penny)?

Determining cost behaviour is essential to planning, controlling, and decision making.

Why is it necessary to separate a mixed cost into its variable and fixed components?

Match each following terms with their correct description from the items listed below. -A factor that causes a change in cost or activity

Why is managerial judgment critically important in gathering information about costs?

A committed fixed cost can be changed relatively easily at management discretion.

Which of the following is the best example of a mixed cost?

Refer to Toronto Company. What is the fixed cost of electricity when using the results of regression?

Using the high-low method, the calculation of the cost line uses the highest and lowest cost periods.

Refer to Edmonton Company. What is the fixed cost of electricity when using the high-low method?

Refer to Lethbridge Company. What is the total utility cost for the month of May?

Describe the three methods used to determine cost behaviour.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters

Exam 3: Cost Behaviour

Refer to Banff Company. What is the fixed cost of leasing when using the high-low method?

Select the appropriate classification of each of the costs listed below.Each classification may be used more than once, and it is possible that one or more of the classifications may not be used at all. -Cost of lubricating machinery

If output increases by 60% and is still within the relevant range, what will be the most likely result?

What is characteristic for the least squares (regression) method?

Match each following terms with their correct description from the items listed below. -Has both a variable and a fixed component

Refer to Saskatoon Company. Using the least squares (regression) method, what is the value of the X Variable 1 (rounded to the nearest penny)?

Determining cost behaviour is essential to planning, controlling, and decision making.

Why is it necessary to separate a mixed cost into its variable and fixed components?

Match each following terms with their correct description from the items listed below. -A factor that causes a change in cost or activity

Why is managerial judgment critically important in gathering information about costs?

A committed fixed cost can be changed relatively easily at management discretion.

Which of the following is the best example of a mixed cost?

Refer to Toronto Company. What is the fixed cost of electricity when using the results of regression?

Using the high-low method, the calculation of the cost line uses the highest and lowest cost periods.

Refer to Edmonton Company. What is the fixed cost of electricity when using the high-low method?

Refer to Lethbridge Company. What is the total utility cost for the month of May?

Describe the three methods used to determine cost behaviour.

Introduction to Managerial Accounting

Basic Managerial Accounting Concepts

Cost-Volume-Profit Analysis: a Managerial Planning Tool

Job-Order Costing

Process Costing

Activity-Based Costing and Management

Absorption and Variable Costing, and Inventory Management

Budgeting, Production, Cash, and Master Budget

Standard Costing: a Managerial Control Tool

Flexible Budgets and Overhead Analysis

Performance Evaluation and Decentralization

Short-Run Decision Making: Relevant Costing

Capital Investment Decisions

Filters